Windows sales were "not that hot" considering the company has begun a new upgrade cycle with Windows 8, which debuted Oct. 26. That same day, Microsoft started selling its first branded computers, the Surface tablet-notebook convertible. Microsoft was mum on sales figures for the new device.

"The fact that they didn't give us Surface unit sales tells you something," Hernandez said.

Microsoft said it's sold more than 60 million licenses for Windows 8 software to date.

The company's server and tools division posted $5.19 billion in sales, up 9%, driven by double-digit percentage revenue growth in SQL Server and System Center.

Microsoft's business division, which includes the Office software suite, saw revenue fall 10% to $5.69 billion. But including deferred sales of the soon-to-be-released next version of Office, sales rose 3%. Microsoft plans to release Office 2013 this quarter. Microsoft's productivity server offerings, including Lync, SharePoint and Exchange, continued to experience double-digit percentage growth.

"Server and tools on the enterprise side is still a real winner for them," said Allan Krans, an analyst with Technology Business Research.

The entertainment and devices division, which includes Xbox video games and Windows phones, saw sales fall 11% to $3.77 billion.

And Microsoft's online services unit, which includes Bing and MSN, continued its losing ways. It lost $283 million on sales of $869 million, up 11%. Losses narrowed.

For the current quarter, Wall Street expects Microsoft to earn 78 cents a share, up 30%, on sales of $20.76 billion, up 19%.

Analysts see Microsoft's June quarter EPS up 21% to 81 cents and sales up 19% to $21.53 billion.

"Expectations have been tempered by the shift in the market. This is not as PC-focused a world today," Krans said. Windows 8 "certainly doesn't have the excitement of prior releases, when PCs were really the main computing device that people were using."

Tablet computers from Apple (AAPL) and Google (GOOG) and smartphones from Apple and Samsung are driving tech spending.

Next up for Microsoft is the release of a high-end version of Surface for professionals on Feb. 8. The Windows 8 Surface Pro will retail starting at $899. The Surface Pro uses Intel (INTC) processors, has a full version of Windows 8 and can run all Windows PC software.

Microsoft (MSFT) late Thursday narrowly beat Wall Street's profit forecast for the December quarter, but it came up short on revenue as Windows PC sales disappointed.

Microsoft earned 76 cents a share, down 3% from the year-earlier quarter but a penny better than analysts had predicted. Sales rose 3% to $21.46 billion, vs. Wall Street's target of $21.53 billion.

It was Microsoft's second quarter in a row of lower earnings.

Microsoft didn't give specific sales and earnings guidance for the March quarter.

Microsoft shares were down 2% in after-hours trading, after the earnings release. Shares rose a fraction in Thursday's regular session.

Windows sales were "not that hot" considering the company has begun a new upgrade cycle with Windows 8, which debuted Oct. 26. That same day, Microsoft started selling its first branded computers, the Surface tablet-notebook convertible. Microsoft was mum on sales figures for the new device.

"The fact that they didn't give us Surface unit sales tells you something," Hernandez said.

Microsoft said it's sold more than 60 million licenses for Windows 8 software to date.

The company's server and tools division posted $5.19 billion in sales, up 9%, driven by double-digit percentage revenue growth in SQL Server and System Center.

Microsoft's business division, which includes the Office software suite, saw revenue fall 10% to $5.69 billion. But including deferred sales of the soon-to-be-released next version of Office, sales rose 3%. Microsoft plans to release Office 2013 this quarter. Microsoft's productivity server offerings, including Lync, SharePoint and Exchange, continued to experience double-digit percentage growth.

"Server and tools on the enterprise side is still a real winner for them," said Allan Krans, an analyst with Technology Business Research.

The entertainment and devices division, which includes Xbox video games and Windows phones, saw sales fall 11% to $3.77 billion.

And Microsoft's online services unit, which includes Bing and MSN, continued its losing ways. It lost $283 million on sales of $869 million, up 11%. Losses narrowed.

For the current quarter, Wall Street expects Microsoft to earn 78 cents a share, up 30%, on sales of $20.76 billion, up 19%.

Analysts see Microsoft's June quarter EPS up 21% to 81 cents and sales up 19% to $21.53 billion.

"Expectations have been tempered by the shift in the market. This is not as PC-focused a world today," Krans said. Windows 8 "certainly doesn't have the excitement of prior releases, when PCs were really the main computing device that people were using."

Tablet computers from Apple (AAPL) and Google (GOOG) and smartphones from Apple and Samsung are driving tech spending.

Next up for Microsoft is the release of a high-end version of Surface for professionals on Feb. 8. The Windows 8 Surface Pro will retail starting at $899. The Surface Pro uses Intel (INTC) processors, has a full version of Windows 8 and can run all Windows PC software.

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Microsoft (NASDAQ:MSFT) Windows 7 still dominates PC usage with 56% market share, followed by Windows XP at 19.2%. But Windows 8 usage edged up to 14% in Feb., up from 13.8% in Jan., said Net Applications. In Feb. '14, Windows 8 had 10.7% market share. The Windows family ran 91.6% of PCs on the ...

03/02/2015 06:45 PM ET

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